NEW YORK TAX SLEUTH IS DISMISSED FOR FILING NO '84 OR '85 RETURNS

By SELWYN RAAB

Published: June 6, 1987

The New York City official responsible for exposing tax cheats was dismissed yesterday after admitting that he had failed to file his state and city income tax returns for 1984 and 1985.

The official, Leroy Frazer Jr., pleaded guilty in Criminal Court in Manhattan to two state misdemeanor counts. Minutes later, he was dismissed from his $54,000-a-year job as assistant commissioner in charge of the Enforcement Division of the Department of Finance.

Outside court, Mr. Frazer's lawyer, John J. Rieck Jr., said Mr. Frazer also had failed to file a Federal tax return for 1985, when he was an assistant district attorney in Manhattan. The lawyer, however, asserted that Federal, state and city taxes had been withheld from Mr. Frazer's paychecks and that he might have been owed refunds for both years. 'He Is Not Evil'

In a statement released by Mr. Rieck, Mr. Frazer said he was ''embarrassed by the series of personal events in my life which caused me to be inattentive to my filing obligations.'' He said neither the state nor the city ''was at risk for the collection of the taxes I owed.''

''To the extent that an explanation exists for his not filing on time,'' Mr. Rieck said, ''it is simply, for whatever reason, he put it out of his mind. He is not evil. There was no intent to steal from anybody.''

City personnel records show that Mr. Frazer made $34,000 in 1984 and $40,000 in 1985 in his previous job as an assistant district attorney. Mr. Frazer's other income, Mr. Rieck said, was a ''modest'' amount in interest from a savings account. '84 Returns Filed This Year

Mr. Rieck said Mr. Frazer filed his 1984 state and city returns in January 1987 but so far had not filed his state or Federal returns for 1985.

Mr. Frazer, then 31 years old, was appointed to the Finance Department last June to supervise investigations of companies and individuals evading city income, sales and real-estate taxes. The appointment came after a background check by the City Department of Investigation, which cleared him for the appointment despite notification from the State Tax Department that there was no record of his having filed returns in 1984 and 1985.

A spokeswoman for the Investigation Department, Peg Breen, said yesterday that Mr. Frazer, when questioned in March of this year about the tax returns, showed investigators photocopies of returns he said he had filed. He signed a sworn affidavit, she noted, that he was being truthful.

Ms. Breen said the department has ''a tremdendous volume'' of background examinations and that the State Tax Department often provided incorrect information about appointees' failing to file returns.

Acknowledging that Mr. Frazer ''slipped through'' the background check, she said that, in the future, the Investigation Department would get ''speedier information'' about tax filings by people appointed to high-level city posts and to the Finance Department.

State investigators said they began an investigation of Mr. Frazer last month after getting a tip that he had lied to the Investigation Department about his returns. Two charges of violating state tax laws were brought against him yesterday by the staff of State Attorney General Robert Abrams.

Mr. Frazer will be sentenced July 15 and faces a maximum sentence of one year in prison on either count and a fine of up to $5,000. 'He Did a Super Job'

Abraham Biderman, the Finance Commissioner, who appointed Mr. Frazer, said ''he did a super job'' during his year in office. He added: ''He was extraordinarly bright and competent. There must have been a blind spot in his personality.''

After annnouncing that he had discharged Mr. Frazer, Mr. Biderman said in an interview: ''I don't see any adverse reflection on the agency at all. He came highly recommended by the D.A.'s office.''

The Manhattan District Attorney, Robert M. Morgenthau, said he had not proposed Mr. Frazer for the Financial Department position. ''He was someone they wanted to hire, and I said he was a conscientious, hard-working assistant,'' Mr. Morgenthau added.

Mr. Frazer, according to his personnel record, was graduated fom Talladega College in Talladega, Ala., in 1977. At Talladega he was the president of the Pre-Law Society, president of the Student Government and on the varsity basketball team. He received a law degree from Temple University Law School in 1980 and was appointed an assistant district attorney in August 1980.

Mr. Frazer lives in the Williamsbridge section of the Bronx. Associates at the Finance Department said he was married and the father of a young child.

Mr. Rieck said the Attorney General's office had refused to resolve the case through civil charges in which interest and penalties would have been paid by Mr. Frazer.

''If he had not been a public official in the middle of a city corruption scandal,'' Mr. Rieck said, ''this would have been handled diferently without a criminal disposition.''